14.	STOCK-BASED COMPENSATION

The Company has one stock-based compensation plan, the 2014 Stock Incentive Plan (Plan), approved by the Company’s stockholders in April 2014. The Plan amended and restated in its entirety the Trex Company, Inc. 2005 Stock Incentive Plan. The Plan was subsequently amended and restated by the Company’s Board of Directors in May 2014 and May 2018. The Plan is administered by the Compensation Committee of the Company’s Board of Directors. Stock-based compensation is granted to officers, directors and certain key employees in accordance with the provisions of the Plan. The Plan provides for grants of stock options, restricted stock, restricted stock units, stock appreciation rights (SARs), and unrestricted stock. The total aggregate number of shares of the Company’s common stock that may be issued under the Plan is 12,840,000 and as of September 30, 2019, the total number of shares available for future issuance are 5,724,953.

The following table summarizes the Company’s stock-based compensation grants for the nine months ended September 30, 2019:


	Stock Awards Granted		Weighted-Average Grant Price Per Share
Time-based restricted stock units		26,325	$	77.53
Performance-based restricted stock units (a)		80,104	$	47.89
Stock appreciation rights		24,536	$	77.70

(a)

Includes 32,462 of target performance-based restricted stock unit awards granted during the nine months ended September 30, 2019, and adjustments of 27,154, 14,900 and 5,588 to grants due to the actual performance level achieved for restricted stock and restricted stock units awarded in 2016, 2017, and 2018, respectively.

The fair value of each SAR is estimated on the date of grant using a Black-Scholes option-pricing formula. For SARs issued in the nine months ended September 30, 2019 and 2018 the data and assumptions shown in the following table were used:


	Nine Months Ended September 30, 2019			Nine Months Ended September 30, 2018
Weighted-average fair value of grants	$	29.56		$	22.09
Dividend yield		0	%		0	%
Average risk-free interest rate		2.5	%		2.7	%
Expected term (years)		5			5
Expected volatility		39.1	%		40.5	%

The Company recognizes stock-based compensation expense ratably over the period from the grant date to the earlier of: (1) the vesting date of the award, or (2) the date the grantee is eligible to retire without forfeiting the award. For performance-based restricted stock and performance-based restricted stock units, expense is recognized ratably over the performance and vesting period of each tranche based on management’s judgment of the ultimate award that is likely to be paid out based on the achievement of the predetermined performance measures. For the employee stock purchase plan, compensation expense is recognized related to the discount on purchases. Stock-based compensation expense i

included in “Selling, general and administrative expenses” in the Condensed Consolidated Statements of Comprehensive Income. The following table summarizes the Company’s stock-based compensation expense (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Stock appreciation rights	$	82	$	56	$	580	$	314
Time-based restricted stock and restricted stock units		602		672		3,057		2,073
Performance-based restricted stock and restricted stock units		162		616		2,045		2,534
Employee stock purchase plan		80		57		162		124

Total stock-based compensation	$	926	$	1,401	$	5,844	$	5,045

Total unrecognized compensation cost related to unvested awards as of September 30, 2019 was $5.5 million. The cost of these unvested awards is being recognized over the requisite vesting period of each award.